Iraq Petroleum Production Suffocating

‘ Reuters reports that “average exports in November fell to 1.21 million barrels a day – the lowest level since at least November 2003 – and down from 1.24 million barrels per day last month,” indicating that something may be seriously wrong.

The figures for November were below earlier projections and lower than earlier export levels, indicating that something was seriously wrong. Apparently, in the south, tankers are lined up in the Gulf and waiting for 14 days to be loaded.

The following is being quoted in the early reports of Chalabi taking over from Bar Uloum:

“A ministry spokesman allied to Uloum said the country was facing what he called an impending oil supply crisis. ‘Production in the north, centre and south is about to suffocate,’ he said.”

There have been no exports to Ceyhan for a long time. If the south were to shut down, the oil export revenue contribution to the budget would be zero. The quote indicates that something is clearly going on.

With respect to the Beiji refinery, as New Orleans demonstrated, once a refinery is shut down, there is more to restarting operations than clicking a switch. So long as it is out of operation, there are only two possibilities: people must drive less or imports from Kuwait and elsewhere must increase, further exacerbating the budget situation.

Note that the 20-30,000 employees of South Oil felt impelled to start a web site and write letters opposing privatization. Three southern Provinces have opposed and apparently have refused to implement the Gasoline Price Program forced on Jaafari by the IMF. As in the case of privatization, the doctrinaire position of the IMF, without regard to the facts and circumstances, could have grave political repercussions. Do they not realize that there is a dirty war going on and also a political revolution? Time enough for all that in a year or two, if then. What is the hurry? There will be no substantial foreign investment until the security conditions improve. There will be no privatization of the oil industry for years in any event. I suspect that there is turmoil and disarray throughout the oil industry bureaucracy and employee rank and file. Chalabi probably will not have the credibility to restore order. He is a fixer, not an administrator. He will be associated with the US/IMF privatization effort. He has no Iraq constituency. Recall that months ago it was reported that he had assumed the leading role in the oil infrastructure security forces. What happened to that? We do not know, but the infrastructure remains insecure.

There is also the following quote:

“An official of the Oil Ministry in Baghdad told ISN Security Watch, on condition of anonymity: “We do not know the exact quantity of oil we are exporting, we do not exactly know the prices we are selling it for, and we do not know where the oil revenue is going to.””

“’Production in the north, centre and south is about to suffocate,’ he said.” [repeated for emphasis] ‘